Applicability of GST on penalty collected by RERA

[Bibhu Tripathy]

Respected experts,

my queries are:

1. Whether penalty collected by RERA is subject to GST as per Schdule-II. As per sl. No 62 of note. 12/2017

GST rate it is not exempted as RERA is not a local authority?

2. Whether fees deposited to GST IS subject to GST.

With regards

[ABHISHEK TRIPATHI]

Dear Sir,
Personally, I think the statutory penalty imposed under RERA Act should not fall prey of paragraph 5(e) of the Schedule II. Imagine a situation calling these statutory penalties as a ‘supply of service’, who is supplying these services? Authority? Act? Now they have become supplier. This liquidated damage is just a chaos which has to be settled by Hon’ble Courts as early as possible.

[ABHISHEK TRIPATHI]

Apologies, I didn’t get your Q.2.

[Ganeshan Kalyani]

Sir, I agree with your view on liquidated damage. In fact it is not an income, then why GST?

[Bibhu Tripathy]

second question is whether RERA is liable to pay any GST for the fees collected from various persons.

The doubt emanates from the fact that the penalty us for non performing as per the contracts.

[KASTURI SETHI]

Fee for what purpose ? Pl. elaborate regarding second query. It depends upon the nature and purpose of fee.

[KASTURI SETHI]

I strongly agree with Sh. Abhishek Tripathi, Sir. It appears that such clause has been created to garner revenue. The definition of 'service' should be amended to exclude such clause/provision with a purpose not to penalize any person who is already a victim of unforeseeable circumstances.

[YAGAY andSUN]

Penalty cannot be treated at part with LD.

AI Summary

GST on statutory penalties: classification as a taxable supply determines whether regulator collections are subject to tax. Whether GST applies to penalties under the Real Estate regulator hinges on classification as a supply of service; commentators contend statutory penalties and liquidated damages are not taxable supplies and that fees are taxable only insofar as they represent consideration for a regulatory service rather than punitive or administrative impositions.